Perils, Loss and Misunderstanding — Know your Insurance Policy

A sailboat’s stolen from your yard. Covered? A motorcycle’s damaged in your driveway. Covered? Your home is damaged due to a sewer line break. Covered?

The answers, in brief, are: depends, depends and depends, based upon specific policies and circumstances.

But a recent survey by the National Association of Insurance Commissioners (NAIC) reveals that many homeowners misunderstand what’s included in their homeowners policies. For instance, despite extensive media coverage on Hurricane Katrina victims whose claims were denied because they lacked flood insurance, 33 percent of respondents incorrectly believe flood damages would be covered by a standard homeowners or property and liability policy.

“Many homeowners could be seriously harmed financially by misunderstandings about their insurance,” Walter Bell, NAIC President and Alabama Insurance Commissioner said. “It’s critical that consumers look closely at their policies and ask their insurance Agents detailed questions to become fully aware of what is and what is not covered.”

Bill Matrogran, section supervisor, Property, agreed and encourages all Policyholders to become familiar with the details of their policies and endorsements.

“There are so many combinations and permutations of coverage,” said Matrogran, “and certain circumstances that may give rise to coverage.”

The survey revealed a number of misunderstandings relating to common losses:

35 percent of respondents think damages from earthquakes are covered. Just like other carriers, Erie Insurance homeowners policies specifically exclude earthquake-related claims. An endorsement can be purchased for losses that arise from an earthquake event.

34 percent of survey participants think damages from mold are covered. Moisture damage such as rust, rot, mold and mildew is specifically excluded in most standard Erie Insurance policies. Mold contamination is only covered on a limited basis, and only if it is the result of a covered peril.

22 percent of respondents think pets stolen from or injured on their property are covered. This is another “depends” situation; there is no coverage for theft of a pet under most Erie Insurance policies, although injuries may be partially covered based upon the policy specifics.

31 percent of people who took the survey think damages from termites or other infestation are covered. According to Matrogran, most policies do not cover such claims.

“It’s always best to talk with your Agent to be sure you understand your coverage, advise your Agent of any major renovations to your dwelling or large content purchases and regularly review your specific situation and coverage needs,” Matrogran stressed.